Virginia Tech 1 Marketing Strategy for the Hybrid Electric Vehicle Team of Virginia Tech “Go Big. Go Fast. Go Green” Presented to: Challenge X Outreach Board Evan Gray – Outreach Coordinator, Engine Sub-Team Leader Ryan Pawlowski – Electrical Sub-Team Leader Hybrid Electric Vehicle Team (HEVT) of Virginia Tech 114 Randolph Hall (MC 0238) Virginia Tech Blacksburg, VA 24061 November 13, 2007 http://www.me.vt.edu/hevt Virginia Tech 2 Table of Contents Table of Contents Executive Summary.........................................................................................................................3 Situational Analysis .......................................................................................................................... 4 Product Overview ..……………………………………………………………………………………………………………… ……..3 Market Segmentation ………………………………………………………………………………………………………….…….. 4 Product Offering ..……………………………………………………………………………………………………………… ……….4 Market Size ……………………………………………………………………………………………………………… …………………5 Market Share and Competitive Environment ………………………………………………………………………………5 Positioning ……………………………………………………………………………………………………………… ………………….6 Tactical Marketing Plan.................................................................................................................. 7 .................................................................................................................Organizational Strategies ..……………………………………………………………………………….………………………….7 Virginia Tech 3 Fuel Demographic Overview …………………………………………………………………………….…………………………7 Placement ………………………………………………………………………………………………………….…… ………………….8 Promotion ………………………………………………………………………………………………………….…… ………………….8 Evaluation ………………………………………………………………………………………………………….…… ………………….8 Summary ......................................................................................................................................... 10 References......................................................................................................................................11 Executive Summary The Hybrid Electric Vehicle Team (HEVT) of Virginia Tech is one of seventeen colleges and universities participating in General Motors’ Challenge X Competition. Virginia Tech has participated in Challenge X for three years and hopes to finish out the final year of the competition with a focus on community outreach. The team will interact with the public in order to raise awareness of alternative fuel technologies. As a result of increased technological awareness raised through numerous outreach events, more interest in engineering and environmental concerns will be generated. There is a huge market for outreach and many opportunities to educate the public on alternative fuel and advanced vehicle technologies outside of the university’s community as well. This year, HEVT will focus on marketing the vehicle to the designated target market, as well as relevant political figures and key authorities in the community. The team plans to target a more youthful market, aiming to shape the future by educating the market in the present. HEVT’s hybrid vehicle is unlike most hybrids currently on the market1 in that it does not involve high levels of 1 GM will be marketing a series of full size, dual mode hybrid, flex fuel vehicles on their 1500 series chassis in late fall 2007 Virginia Tech 4 consumer sacrifice such as a smaller vehicle with less power and decreased cabin space. The marketing strategy that is presented in the following report provides details for the plan that the Hybrid Electric Vehicle Team of Virginia Tech will follow to promote their vehicle. HEVT will attempt to educate their target audience in a way that is both innovative and informative. Specific strategies regarding the target audience and how they will be reached are presented below. Situational Analysis Product Overview. The Hybrid Electric Vehicle Team of Virginia Tech has spent the past three years developing, building, and refining their hybrid vehicle. The team is currently focusing on refining their vehicle by updating key powertrain components as well as collecting data and validating vehicle performance through this data to assure readiness and reliability for the final year of the Challenge X competition. Three years ago, the team was presented with a 2005 Chevrolet Equinox donated by General Motors for the Challenge X Competition. The vehicle was then completely overhauled and converted it into a hybrid, alternative fuel powered vehicle. The vehicle uses a split parallel architecture structure that relies on an internal combustion engine as well as an electric motor for power assist. The engine is a flex fuel engine that can operate on any fuel containing up to 85 percent ethanol; standard pump gas has roughly 10 percent ethanol, and HEVT normally runs their engine on E85, with an 85 percent ethanol content. The vehicle has all the standard amenities including XM radio® and GM’s OnStar® service. Accessories like HID headlights, LED signals, side curtain airbags, and safety restraint system not only add to the vehicles appearance, but also to its safety and performance. With roughly 250 combined brake horsepower (bhp), HEVT’s vehicle will go from 0 to 60 mph in approximately 8 seconds and from 50 to 70 mph in roughly 3.5 seconds. The team has been able to engineer their vehicle systems to support a higher level of performance while using 78 percent less petroleum and a 25 percent increase in efficiency. These performance levels will make HEVT very competitive when targeting the current hybrid vehicle market segment. Market Segmentation. Today’s hybrid vehicle market is beginning to expand. As oil prices continue to rise and people become more open to finding alternative fuel sources, greater interest will develop toward hybrid vehicles. There are three consumer segments to consider in the hybrid market: • Those who are willing to help the environment at all costs • Those who are willing to help the environment until it becomes an inconvenience • Those that are not concerned with the idea of hybrid vehicles Virginia Tech 5 HEVT is interested in targeting individuals who do not mind helping the environment as long as it does not become an inconvenience. Until very recently, the purchase of a hybrid vehicles meant the consumer had to make some sort of sacrifice. The hybrid either had to be smaller, slower, or have other performance restrictions associated with it, but HEVT’s vehicle is different. HEVT hopes to market their vehicle to the segment that may consider living green when sacrifices are kept minimal. By providing a higher level of performance without compromising important features, HEVT is appealing to consumer’s desires. Product Offering. HEVT’s 2005 REVLSE Equinox offers all of the features of a traditional, stock vehicle, plus a few added features that set it apart from its class. Their vehicle offers: • High intensity definition (HID) headlights • XM® Satellite radio • In dash DVD/computer interface • In dash 6-disc CD changer • Sliding rear seat • 185 hp, turbocharged, inline 4-cylinder engine • Five speed manual transmission • AWD Electric Assist Mode • Flex fuel capable • Lightweight, high strength polycarbonate windows • LED signal bulbs • Back-up sensors By offering features such as those listed above, HEVT hopes to successfully reach the market segment that is interested sustaining the environment. Vehicle features that increase luxury, capability, and safety will appeal to an audience that is concerned with potential sacrifices that are perceived to come with purchasing from the hybrid market. HEVT can increase awareness and interest in hybrid and alternative fuel technology vehicles by reducing consumer sacrifices. Market Size. Virginia Tech is located in Blacksburg, VA, a small town nestled in the Blue Ridge Mountains at roughly 2000 feet above sea level. Blacksburg is located about 42 miles southwest of Roanoke, VA and about 156 miles northwest of Greensboro, NC. Approximately 39,700 people call Blacksburg home, of these, 60 percent are between the ages of 16 and 24. In an effort to expand market size due to the rural location of Virginia Tech, HEVT may travel and market to surrounding regions and metropolitan areas. Hybrids are not heavily marketed through any media channels in the Blacksburg area. Virginia Tech 6 HEVT hopes to increase advanced technology vehicles and alternative fuel awareness to the more rural areas of Southwest Virginia. Market Share and Competitive Environment. In a nationwide ranking, Virginia is seventh in the number of newly registered vehicles for the year 2007.2 Based on this value, HEVT is targeting a state that is becoming one of the most rapidly expanding hybrid markets in the country. According to census data, there are roughly 1.3 hybrids per 1000 Virginia state residents.3 In the area directly surrounding Virginia Tech, specifically Blacksburg and Christiansburg, the number of hybrids on the road is lower than the state average. Emerging interest in the hybrid market of Virginia will help HEVT announce and showcase their vehicle. However, this high level of interest will also result in a large competitive market. HEVT’s market is one of great potential for expansion, but also one that will require focus and targeting in order to spread interest and promote alternative fuel technologies while maintaining a competitive advantage in the hybrid market. Companies with vehicles on the market in direct competition with HEVT’s vehicle include Toyota, Ford, and